Audit Questions State Contract With Tire Company
Posted September 5, 2006 8:38 a.m. EDT
RALEIGH, N.C. — A state contract exceeding $2 million a year is meant to save taxpayer money by retreading used tires for state vehicles. For example, Wake County school buses go through an estimated 6,000 tires a year. While new tires go on the front, the rear axles get recapped tires, costing the county about $250,000 a year.
The audit questions the state's contract with White's Tire's Service in Wilson, saying that there was a potential overcharging of $361,000 per year for the past four years, adding up to $1.4 million over a four-year period.
Auditor spokesman Chris Mears said the concern centers on spot repairs, where tire company employees fill in each individual cut or hole in tires prior to the retreading process. That can add as much as $40 to the cost of the repair.
According to the audit, other companies conduct three spot repairs per tire 4.3 percent of the time. After evaluating thousands of invoices, investigators found that White's billed the maximum surcharge more than 99 percent of the time.
"That's how they would maximize their profit," said Mears.
When questioned by auditors, White's employees called the repairs and billing legitimate. One employee was quoted as saying, "We charge for the spot repairs because we can."
With no way to verify each tire repair, the auditor isn't alleging fraud. However, the audit states that the state could get a better deal, and the auditor wants the next contract to be rewritten.
Late Tuesday, company owner Ed White called WRAL to criticize the audit. He said his workers do far more than three spot repairs on each tire, no matter the industry standard. White said the tires are as good or better than new, making them a good deal for taxpayers.